Childcare Payments Bill

Catherine McKinnell Excerpts

Monday 17th November 2014 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker]

With this it will be convenient to discuss the following:

Amendment 2 in clause 1, page 2, line 4, at end insert—

‘( ) The amount of the top-up payment is 66.66 per cent. of the amount of the qualifying payment where the qualifying child is a disabled child.”

Amendment 1 in clause 14, page 8, line 42, at end add—

‘(3) A child is a qualifying child for the purposes of the Act until the last day of the week in which falls on the 1 September following the child’s eleventh birthday (or eighteenth birthday in the case of a disabled child).”

[Catherine McKinnell]

New clause 1 stands in my name and that of my hon. Friend the Member for Wirral South (Alison McGovern), whom I wish to congratulate on her new role. It calls on the Government to consider the necessary help that hundreds of thousands of parents of three to four-year-olds need now to cover the ever-rising costs of child care.

Before I elaborate on the new clause further, I wish to reiterate a point that the Opposition have stressed throughout proceedings on the Bill. We welcome any new investment in child care and, in particular, any extra support for hard-pressed parents and families up and down the country who are struggling to juggle work and family life. That is worth remembering because, after all, we are the party which, in government, pioneered investment in early years. The principle that every child matters was at the centre of the Labour Government’s work across all Departments. We are the party that, in government, made no apology for focusing our efforts on, and redirecting any available support to, the children and families who needed our help the most. We are the party that, in government, made it its business to tackle disadvantage and to improve the life chances of every single child from the earliest possible age to give them the best possible start in life.

[Andy Sawford (Corby) (Lab/Co-op)]

I agree with the case my hon. Friend is making. Does she share my concern about the closure across the country of Sure Start centres, which were a key part of that commitment to supporting children and families, including the Raunds Sure Start centre in my constituency, which the Tory county council is now going to close?

[Catherine McKinnell]

My hon. Friend makes a very valuable point and I was just about to come to that. We are the party of Sure Start and the thousands of Sure Start centres that existed in 2010. It is not specifically relevant to this debate, but we could not allow it to pass without mentioning the very deep concern up and down the country about the future of our Sure Start centres.

There are concerns, which were made abundantly clear by a number of witnesses in Committee last month, that the Bill does not go anywhere near far enough to provide the support that thousands of parents and families desperately need right now. They need that support now, not in 12 months’ time, which is why we tabled new clause 1. Based on the Family and Childcare Trust’s annual survey, we know that child care costs have risen five times faster than wages since 2010, at a time when wages have lagged behind prices, leaving people £1,600 a year worse off on average. This support is even more vital when we see how much parents have lost out as a result of the Government’s choices: the decisions to cut tax credits, child benefit and maternity pay, and to close thousands of Sure Start centres.

As we saw and read in the news yesterday, research from the London School of Economics and the Institute for Social and Economic Research at the university of Essex shows clearly how the burden of austerity under this Government has fallen most heavily on those with lower incomes. The research found that the Government’s tax and benefit changes have seen the poorest lose about 3% of their incomes, while the richest half of the country have actually seen their incomes increase by 1% to 2%. That blows away the Government’s claims from the start that we are somehow all in this together. The research highlighted the fact that families with children have fared worst of all, which confirms our worst fears. Single parent families, in particular, have lost far more through cuts to tax credits and other support than they may have gained through any tax changes, proving that the Government have given with one hand but taken away far more with the other—so much for being the most family-friendly country. Families have lost out on up to £1,500 a year due to changes to tax credits alone. Tax credits are a vital part of income for many working parents, especially those on the most modest incomes.

When we look at all the tax and benefit changes since 2010, including the Government’s much-lauded and touted personal allowance increases, we see that families have clearly been hit hardest of all, and that will remain the case right up to the general election. A family with both parents in work will be about £2,073 a year worse off and a family with a single parent in work will be about £1,300 a year worse off. Despite the Conservatives’ claim of creating the most family-friendly country and the Liberal Democrats’ supposed belief that families should get the support they need to thrive, the Government have not been family-friendly and they have not stepped in to provide families with the help they so desperately need to get to grips with the soaring costs of child care. Far from stepping in, they have pulled the rug from under the feet of many families. Any extra help for parents struggling with the cost of child care is clearly to be welcomed. However, not only is the Bill too little too late for hundreds of thousands of families, we are disappointed that the Government have so far refused to consider that additional support could be offered to families right now. That is why we have tabled new clause 1.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend agree that we can see the Government’s attitude to child care with their closure of more than 400 Sure Start centres?

[Catherine McKinnell]

Up and down the country, there is deep concern about the disappearing Sure Start services. We know that the worst is yet to come when we look at the dire straits in which many local authorities find themselves and the difficult decisions that many are having to make about their Sure Start services. My hon. Friend makes a very good point: that does sum up the Government’s attitude to support for children and families. They simply wash their hands of the issue whenever it is raised in this House.

We tabled new clause 1 because we want to compel the Government to explore the effectiveness of extending the free entitlement for three and four-year-olds when both parents are in work. The first part of new clause 1 seeks to understand what support the current proposals will provide to the parents who need it most. The free entitlement introduced under the Labour Government, which happily has been continued under this Government, makes a real difference to hard-pressed families. The simple truth is that, months after the Bill was first published and introduced, we are still none the wiser about exactly how many parents will be better off as a result of the top-up payments, or, crucially, by how much.

That stands in marked contrast to our plans to extend the free entitlement for three and four-year-olds, which will be worth £40 a week, or £1,500 a year, to about half a million children. We know from the Government’s impact assessment that of those families who will be newly eligible for support under the Bill—those who are self-employed, or those whose employers do not currently offer employer supported child care vouchers—the average benefit will be about £600 a year. Clearly, that is far lower than the £2,000 per child that the Government have been touting ever since they announced the policy for top-up payments in March.

It is worth remembering that some 520,000 families currently benefit from ESC vouchers. The Government’s impact assessment sets out a number of case studies where families might be better off or, indeed, worse off under the new top-up payments. The impact assessment suggests that families can retain their ESC vouchers if they wish, but goes on to list a whole range of caveats relating to whether parents will be able to continue to qualify, whether they would be better off remaining under the current voucher scheme, or whether the new top-up scheme might be better for them.

Clauses 62 and 63 seek to wind down the ESC scheme over the next few years, closing it to new entrants. Presumably, ESC vouchers will eventually vanish completely. If a parent changes jobs or if their employer stops offering vouchers—this could well happen, as voucher providers are set to see the majority of their business disappear—they will have no choice but to switch to top-up payments, leaving many worse off.

We heard evidence from a wide range of witnesses in Committee last month who cited the Resolution Foundation’s work. It is worrying that the Resolution Foundation had to undertake that work because the Government have not done sufficient work to look at the true impact on parents. The Resolution Foundation suggests that 80% of the families who will benefit from top-up payments are in the top 40% of income distribution. The remaining 20% will go to those in the middle of the distribution scale. If the key aims of the Bill are to support parents with the cost of child care and to help more parents back into work by making work an economically viable option, those figures raise questions about whether its aims are achievable through this Government scheme alone. In contrast, many child care experts agree that Labour’s child care plans, as outlined in new clause 1, meet these twin aims.

--- Later in debate ---

[Priti Patel]

I thank the hon. Gentleman for his comment. I outlined measures relating to disabled children in Committee. We recognise the high costs faced by parents of disabled children, and the specialist care that their children need, but increasing the amount of top-up is obviously not appropriate, for the reasons that I have already outlined. I have made a commitment on disabled children, and I am exploring the possibility of increasing the maximum amount that a parent of a disabled child can pay into their child care account. For those reasons, I ask the Opposition to withdraw their new clause.

[Catherine McKinnell]

I thank the Minister for her thorough reply to the concerns that I expressed earlier. She has gone some way towards alleviating them, but some concerns remain. We shall have to give the Government the benefit of the doubt on the delivery of her reassurances, but that does not take away from the fact that dealing with the supply-side issues and extending the free entitlement for three and four-year-olds would constitute a much better offer to parents. The Government could do that now to provide support for parents who are struggling with child care costs and with the cost of living more generally. We will therefore press new clause 1 to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Catherine McKinnell]

Any new investment in child care—particularly support for struggling families up and down the country who are battling to juggle their work and family lives—is clearly welcome. The Bill is therefore important, but it is long overdue for thousands of parents.

Fundamentally, we remain concerned that the Bill will simply not address the situation in which too many parents have been left. The evidence is now overwhelming. The cumulative changes to tax and benefits over the Government’s time in office have hit families hardest, as is clearly shown by new research published today. From our analysis of official statistics, we know that some families in which both parents are in work will be £2,000 a year worse off on average by the next election as a direct result of the Government’s tax and benefits choices. Researchers from the London School of Economics and the university of Essex have released findings showing that the clear losers under the Government are lone-parent families, large families and children.

This summer, the Prime Minister announced that all Government policies have to pass a families test. It is interesting that that is his aspiration only now, because it is abundantly clear that the Government have completely failed the families test to date. We share the widely expressed concern that the Bill will not go anywhere like far enough to make up the shortfall that families face, partly because of the tax and benefits changes, but also because of soaring child care costs.

Aside from that central issue, we have several other concerns. We are worried that parents will be left exposed to inflated child care prices, as my hon. Friend the Member for Wirral South (Alison McGovern) clearly set out in her speech on new clause 2. The Government have only one chance to get the hugely important IT infrastructure right, but crucially there is huge concern that parents might face a nightmare of complexity and confusion if the Government fail to provide adequate support and information to help them to make informed choices and to navigate between the schemes for universal credit and for the top-up payments.

Welcome though the support is, for far too many parents it will be far too little, far too late. I hope that the Minister has taken on board the concerns we raised throughout the proceedings in Committee and on Report, whether on some of the more technical aspects of the Bill’s operation or on the more fundamental issues.

[Ms Ritchie]

My hon. Friend is making some compelling points. Is she aware of research by the Resolution Foundation that found that 80% of the families who will benefit from the top-up payments available through the tax-free child care scheme are in the top 40% of the income distribution scale, and that the remaining 20% will go to families in the middle of it? How will the scheme help those on low incomes, lone parents and those with large families?

[Catherine McKinnell]

My hon. Friend has herself made the point very powerfully. I was concerned when the Minister spoke at length about child poverty because the Bill will do very little to deal with such issues, and we know that such figures will only increase. Levels of child poverty have increased significantly under this Government, as the facts and evidence prove.

Although we should focus on what the Bill will achieve—it will provide support in meeting demand for some payments for child care—my hon. Friend clearly sets out which parents will benefit most from the support. However, even those parents are concerned that the scheme might unduly complicate their lives. It might be burdensome for parents to navigate it, particularly those at the lower end of the income scale who have to navigate between a reduction in universal credit support and a movement into the top-up payments scheme, where potentially disastrous child care support pitfalls await them. We discussed that at length in Committee and we have put our concerns on the record. Other Opposition Members and I very much hope that the Minister has taken all such concerns on board and can deliver on the reassurances that she has given.

Let me take this last opportunity to urge the Government to recognise the value to parents not only of this support with child care costs, but of the extension of the free entitlement to three and four-year-olds. Quite simply, that would ensure that working parents are better off. It would help more parents to get back into work or to work more hours, and it would help to bring home more pay for the hours they work. We know that so many parents are desperate for such support. It would be simple and effective, and it would not place any more burdens on parents than those they already face. It would not add any more complexity to a child care market that is already hugely complicated.

Parents have struggled for four years under this Government with a child care crunch of rising prices alongside stagnant wages. Although we will support the Bill tonight, I urge the Minister to ensure that she, her officials and her partners who deliver the scheme fulfil the promises that have been made during its passage in Committee so that parents can receive this much-needed support.

I look forward to the arrival, in 2015, of a Labour Government who will ensure that parents receive not only the support provided in the Bill, but an additional 10 hours of free child care for three and four-year-olds. That will deal with many of the supply-side and price inflation concerns, and it will also provide child care support for the parents who will not benefit at all from the scheme.